KYC is needed to help companies that run give aways to eliminate abusers on their give aways. However, there is no guarentee that those companies won't leak identities of participants someday later. Hence, I think that it is better to avoid such give aways if people don't lack of money. There are so many different things to get money, not only give aways with KYC requirements.

If someone has already passed through the KYC cryptocurrency, it is a great opportunity to pass KYC again and get free 25$ in XML

Certain things are not for everyone, a lot of persons from the third world county will jump at it, $25 afford a decent meal and to someone whose disclosing of his identity does mean much to would not mind participating in such. Besides, there are a lot of Airdrops and bounties that require such details even though it is not certain they will pay and a lot of persons still join them. Different strokes for different folks

Besides Blockchain and Coinbase, is anyone else giving out free XLM?

I passed kyc and I do not regret , I do not think that something bad can happen to your documents , I think this wallet has a great reputation and it is unlikely that they will expose themselves

Blockchain.com is a trusted wallet and is here for years supporting the growth and development of bitcoin.
As people are readily providing their identity to scam ICOs, gambling sites and even on small airdrops, I don't think providing it to blockchain.com is a larger risk compared to the reward.

For me if you asked me I joined because of the features made available for one to use after passing kyc, it enables me to swap my tokens into a stable coin, I think the 25 usd is for the stress. Besides most exchanges made us go through KYC without compensation for the stress

People can claim their airdrops with KYCs to get $25 on reliable sites, includes Blockchain.com, or Coinbase and some other old crypto sites. For new born sites, which have not proof of reliability, it is better to avoid KYCs requirements and take risks with your identity leaks to get just $25. Be careful with your identity, and in long run you won't regret.

For blockchain.com, it is sure that people can get protection for their identities. However, things can be changed, and blockchain.com can not manage their site out of attacks over years. Therefore, do it with your risk-acceptance and prepare for worst cases. So, please don't store all your funds in accounts that you use same identity to claim airdrops on whatever sites, not only Blockchain.com. Just in case.

Accept rules, and join them with accepted risks with KYCs. Most of times, there is no issue with KYCs; but in worst cases, issues might occur. When issues occur, you will be stucked in a big mess. That's what I made my decisions to avoid KYCs if it is not mandatory for my crypto career.